Property market is shifting towards the middle

More than 70% of the home loans currently being granted are for amounts under R1m, according to the latest statistics from BetterBond Home Loans, which accounts for more than 25% of all residential mortgage bonds being registered in the Deeds Office and is SA’s leading mortgage origination group.

Another 26% of the loans being granted are in the R1m to R2,5m range, leaving only about 3% in the over R2,5m category, says company CEO Shaun Rademeyer.

“Indeed, despite all the attention recently given to the increasing sales of multimillion-rand trophy homes, the real backbone of the housing market at the moment is the lower end, where every month sees many thousands of people making offers to purchase and applying for home loans.

“This is reflected in our figures in the fact that 48% of applications are still coming from first-time buyers, whose average home purchase price is R630 000, and who are paying an average of R67 000 as a deposit.”

However, he says, there have been some quite noticeable shifts in lending patterns over the past 12 months, in line with a gradual upward shift in property prices, and with an increase in purchasing in the middle-income sector, which has more repeat buyers with equity in existing homes that they can leverage as deposits.

“For example, the proportion of bonds grated in the R250 000 to R500 000 price range has dropped by more than 16% in the past 12 months, while the proportion being granted in the R1,5m to R2m range has risen 33%.

Meanwhile, Rademeyer says, it is interesting to note that despite the banks’ increased appetite for mortgage lending in the past 12 months, the percentage of loans being grated for 100% of the purchase price has declined, with the result that 61% of all borrowers are now required to pay a deposit.

“And according to our figures, the average percentage of purchase price required as a deposit has been a not-insignificant 18,5% over the past 12 months – although it does vary greatly depending on the home price category and, of course, on the individual borrower’s credit profile.

“This trend is tilting things further in favour of middle-sector buyers and we expect it to gain momentum as interest rates and household expenses continue to rise over the next 12 months.”

Given the hand they were dealt, government has performed a delicate balancing act which it is hoped will serve to reignite confidence in investment in South Africa, regain our global credibility and satisfy the credit ratings agencies, says Dr Andrew Golding, chief executive of the Pam Golding Property group.

These days most buyers are using online property portals like Private Property when house hunting due to the convenience, up to date information and variety on offer. “The property portals have revolutionised the way buyers shop, but they do need to be cautious – viewing photos online is no replacement for viewing the property in person,” says Bruce Swain, CEO of Leapfrog Property Group.

Owning a home is a milestone that most South Africans aspire to. Becoming a homeowner is a step towards growing personal wealth and owning an asset that appreciates in value over time, provided of course that the correct principles are applied during the buying stage of the process, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

The suburb of Greenstone in Johannesburg east came to be over the last two decades. “In the beginning, it was literally just a hill with not so much as a shopping centre,” says Michael Levy, Property Consultant at Jawitz Properties Bedfordview. Today it has plenty shopping facilities and is fully built, boasting high-density, upmarket housing and residential estates, though still has a few pockets poised for commercial development.

Possibly one of the biggest sources of contention between landlords and tenants surrounds the rental deposit. “Most tenants rely on getting their rental deposits back when moving, so that they can use it to pay a deposit on their new home. Having it withheld or even having large amounts deducted can lead to a lot of distress,” explains Bruce Swain, CEO of Leapfrog Property Group.